February 5th, 2010
12:35 PM ET

Financial Dispatch: The jobs black hole: 8.4 million lost

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/02/05/joint.economic.committee.jpg caption="A Joint Economic Committee hearing on the latest unemployment figures."]

Jennifer Rizzo
CNN New York Assignment Editor

It’s still a recession if you don’t have a job, and 20,000 additional Americans lost theirs last month.

The economy is still shedding jobs but the unemployment rate has dropped, according to the Labor Department. The monthly report shows the unemployment rate dropped to 9.7% in January, beating economist expectations. They were expecting the jobless rate to hold steady at 10%.

Despite the welcomed drop, many economists remain skeptical, viewing it as a result of people walking away and giving up on the employment search. You are not counted as “unemployed” in the survey unless you are actively seeking a job. About 2.5 million people can be described that way in January.

In a CNN Money gallery, discouraged job seekers tell us why they gave up.

Job losses still trickled in last month. The economy shed 20,000 jobs, even though economists were expecting to see 15,000 jobs created. The hard hit construction industry endured the worst of it, shedding 75,000 jobs in January.

But in an encouraging sign 44,000 jobs were created in the business services industry, which economists see as a signal for overall economic activity.

And for those who are employed, the report indicates longer work days, 6 minutes on average, and a modest 4 cent gain in the average hourly salary.

Although the jobless rate fell last month, job losses from the Great Recession were much worse than originally thought. The Labor Department says it under counted job losses by 600,000 last year—meaning 8.4 million jobs have been lost since the economic downturn began in December, 2007.

Job creation is on President Obama’s agenda today. The President will meet with small business owners in Maryland, talking job creation and initiatives like tax cuts and increased lending.

On Capitol Hill, the Joint Economic Committee holds a hearing on the employment situation. Bureau of Labor Statistics Commissioner Keith Hall will testify.

The Recall That Keeps on Giving

Toyota President Akio Toyoda apologized for the automaker's global recall during an impromptu press conference in Japan Friday. He said the company is working to restore customer confidence. "Believe me, Toyota's cars are safe," Toyoda told reporters.

The car giant chief vowed the company will set up a committee to look at what led to the recall and ordered a prompt response to a new round of brake problems with the Toyota Prius. Toyoda said a decision on whether there will be another recall will be announced as soon as possible. The National Highway Traffic Safety Administration is investigating the problems with the Prius brakes. A total of 8.1 million Toyota vehicles have been recalled since last week.

And you can add another car to the growing list of problems with various Toyota models. The troubled automaker said yesterday it was checking the brake systems of the latest Lexus hybrid vehicles, as well as a Japanese model called the Sai. They have the same system as that used on the 2010 Toyota Prius. A recall of these vehicles has not been announced. Toyota said it has not received any complaints about the brakes from consumers.

Keep track of Toyota’s problems that we now know go back two years at CNN Money.

Filed under: Economy • Job Market
soundoff (3 Responses)
  1. Bob Cohen

    There are two types of surveys that have been used for a number of years to determine employment changes, a household survey and a payroll survey. Each has a large enough sample that it is hard to say that there is serious under- or overcounting. That is just not a valid charge. Leaders can't just openly manipulate these figures.

    What is disconcerting to the public is that measuring employment around this time of the year is traditionally very difficult, since there is a large amount of seasonal employment and there can be big swings between December and January as retail and some other service employees hired on a more temporary basis for the holidays lose the jobs they held in December. In addition, there are adjustments to the 2009 figures for unemployment that the Labor Department makes in January that can influence the numbers reported for December and January. These latter two shifts in numbers should be looked at more closely, as should the size of the seasonal adjustment. Without explaining these it will be harder for people to understand what is really happening to the labor force.
    In addition, far more attention should be paid to the jobs lost at state and city governments as a result of their difficult financial situation. These job losses could increase in the next months as decisions about how budgets will be balanced are made.

    February 5, 2010 at 3:44 pm |
  2. Maurizio

    Mr. Gibson could not be more right! Total manipulation! And the market reacts to that manipulation.....get it? Could it be done on purpose? Nahhhh.... right?

    February 5, 2010 at 2:01 pm |
  3. Tim Gibson

    All the numbers our leadership provide in looking at jobs are not true numbers by any means. Under or over counting remains a problem as our leadership is more concerned with public appearance than with public interest. Just a hunch, but I think the hanging chad is ready to fill that black hole in the jobs market.

    February 5, 2010 at 1:15 pm |